1. I just choose yes, works and loads my saves everytime, idk about the other option
2. PSRAM writes the gba rom to your slot 2 device, so you can use it as a standalone cart, NOR loads the game on the slot 1 and plays the game on the slot 2, loading takes a few secs though.
3. No

PSRAM is like the RAM in your computer, you have to load it all the time to use it. turn the power off and everything gets erased. Good for games where you plan to play every once in a while or want to play a quick game of only.

NOR is like the hard drive, you only need to write it once and you can use it over and over. turn off the power and it will still be there when you turn it back on. Good for games where you plan to have long hours of play, games like pokemon or prg types that take more than a few hours.

Your save is stored in an area called SRAM, not the same space as PSRAM.